Home-grown BB$

Some people are making millions with a computer and a "couple" of phone lines. Jack Rickard scopes out the emerging billion-dollar cottage industry of BBSes.

From its lowly beginnings in one man's house fifteen years ago, the electronic bulletin board, or BBS business has grown to an enormous, billion-dollar industry. But it is an industry so dispersed that no one can quite get a handle on it – where it is, what it's made up of, or what's driving it. And no one has been able to get a rope around it to make any impressive profits on any large scale. But an increasing number of BBS operators have caught the entrepreneurial bug, and for some, life online is not so bad. These winners are almost always tiny, efficient, grass-roots operations. Some run a bulletin board as a part-time business that will make the house payment. Others have left their day jobs forever to run a BBS for a living.

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The desire to operate a business at home based on BBS technology is incredibly powerful. It's ironic that much of the technological change that makes bulletin boards possible is also responsible for shrinking our globe in other ways as well. The ability to trade goods globally in an efficient fashion comes directly from advances in communications and transportation. But that same efficiency has caused a tremendous amount of dislocation in our own economy as the corporate models of the past fail. Unable to reinvent themselves fast enough to keep up with markets that change overnight, companies are shedding hundreds of thousands of very well-paid workers who, in the grand scheme of things, didn't do very much. Many of those workers now dial madly into the night, looking for the "way out." And some are finding it by starting a bulletin board system.

Bob Mahoney started a single-line BBS on an IBM PC in the upstairs bedroom of his Wisconsin apartment during Thanksgiving weekend of 1983, and very nearly started a family dispute by jumping up from dinner every few minutes to see if anyone had called. Bob was the "PC guy" at John Deere at the time, but he wanted to run a BBS and offer software programs and advice to business people. He named the BBS EXEC-PC and became one of the earliest BBS operators to begin charging a fee for access to the BBS. The system caught on, and within a year, Mahoney added a second line so that callers didn't get a busy signal.

By 1985, he had six lines and 280 Mbytes of file storage. In 1986, his wife Tracey left a promising career to manage the business end of the BBS. Mahoney found that callers were willing to pay a modest $60 per year subscription fee to have access to lots of files. They also liked not having to deal with the constant busy signals they got when dialing single- line bulletin boards.

So if a little bit is good, more must be better. This year, EXEC-PC features 250 telephone lines and 24 Gbytes of file storage. The Mahoneys have received more than 6 million calls since going online and currently handle about 4,500 calls daily from a user base that downloads some 750,000 files monthly. Now based in an office park, the EXEC-PC bulletin board is still run by a tiny team that works incredible hours reading and responding to e-mail, managing the file collection, and devising new ways to offer new services to attract callers in a very competitive market. They still don't have a Human Resources Department, but they do have an estimated 30,000 subscribers from 43 countries paying the current $75 subscription fee, resulting in an annual gross income of nearly $2 million. And despite the cost of the lines, the equipment, software, maintenance, office rent, and salaries, profit margins are sufficient to indulge Bob's penchant for racing automobiles.

Crude Beginnings

The world of the BBS did not spring into being overnight or bring with it the societal madness that CB radio, Rubick's Cube, or reggae did. It was birthed and nurtured in pain and confusion, and in many ways continues in that vein.

PC telecommunications were officially off the ground for the masses scarcely three years after the birth of the PC itself. Ward Christensen, member of a Chicago computer club, pieced together a software program in January 1978 that allowed a Northstar Horizon CP/M personal computer built by his friend, Randy Suess, to answer the telephone using a 110-bps modem. Callers could post messages on this system for subsequent callers to read and the device served as an electronic version of their club bulletin board, where pieces of computer hardware were exchanged or sold.

Chicago's CBBS was the first electronic bulletin board – one that still operates from Randy Suess's house in Chicago. It is one example of how much, and how little, the world of electronic bulletin boards has progressed in the past fifteen years.

In that time, the personal computer business, and the software industry it spawned, have grown to the point that individual companies started in garages have emerged as multi-billion-dollar enterprises. And these businesses are monitored, measured, marketed, and tracked quite mercilessly.

Despite its use by more than 12 million callers in the US and its growth to include some 45,000 public bulletin boards, the online world as an industry has struggled to life most awkwardly. Whole industries have come and gone in the time the world of bulletin boards and commercial online services has been grappling with stop bits, start bits, parity, file transfer protocols, ANSI graphics, CCITT standards, modem speeds, assorted other detritus of compatibility.

In the past dozen years, a half-dozen serious attempts to get a more commercial "videotext" off the ground were launched by the likes of Bell Canada, Nynex, Knight-Ridder, Southwestern Bell, and US West. All so far have been ignomious failures by any measure, but more specifically, they have failed financially.

Prodigy, a national online service with some 40,000 access lines and 2.1 million subscribers, has spent more than a billion dollars to get off the ground. The system is certainly active, with as many as 23,000 callers online simultaneously each evening and over 180,000 messages posted on its electronic bulletin boards each day. Even so, the company still loses millions per month, according to analysts' best guesses. With both of its parent companies – Sears and IBM – marking up record losses themselves, Prodigy is currently searching for a reason to live.

Despite the public failures, there are many private, and to some degree small-scale, successes. Those 45,000 publicly accessible dial-up bulletin boards (in the United States alone) operate over 100,000 access lines, and approximately 12.2 million callers dial into them on a regular basis. The callers pay modest subscription fees of about $50 per year; that's more than $100 million in subscription fees paid annually. Those callers installed nearly 4.7 million additional telephone lines just to call bulletin boards – representing nearly $850 million in annual income to telephone companies, who are only vaguely aware of their existence. And BBS operators order $20 million worth of modem equipment each year. The BBS population is virtually exploding. Consider the following:

This is a very dynamic community of bulletin boards. Of the 45,000 bulletin boards in operation at the end of 1992, over half will not be in operation at the end of 1993 – but most likely an additional 30,000 systems will have gone online to bring the total close to 60,000 systems in the US. The total seems to double every eighteen months.

An interesting measure of BBS activity worldwide is the International FidoNet, a network of bulletin boards started by Tom Jennings in 1984 that shares electronic mail and message conferences. The percentage of BBS activity represented by FidoNet has been relatively stable at about 27 percent for a number of years. FidoNet membership is compiled in a telephone directory called a "nodelist" which is published each Friday. In the first week of March this year, the FidoNet nodelist sported 19,960 entries. This would indicate a worldwide BBS population of nearly 74,000 systems.

Where the Money Is

Mahoney's EXEC-PC is probably the largest BBS in the country under the classic definition. But it is not necessarily the most profitable. Jim Maxey's Event Horizon BBS in Lake Oswego, Oregon probably holds that title. Maxey got involved early with digital scanning and imaging – originally with an eye toward space and astronomy images – hence the Event Horizon title. But his callers fancied pictures of women and various sexual imagery, so Maxey catered to the demand. According to Maxey, his system grossed approximately $3.2 million in 1992 on 64 lines running on a single PC in his office. With about ten employees, Maxey photographs images, then scans, formats, and archives them on his system. Callers pay a rate of about $10 per hour to access the system.

Indeed, images of nudity and sex seems to be the cocaine of the online world, which can lead to problems. Like many bulletin board operators, Maxey offered scans of copyrighted images from magazines, including Playboy. Last year, Playboy Enterprises filed suit for copyright infringement. The suit was settled out of court with Maxey paying Playboy $500,000 in cash. The online sex market is apparently so profitable that as a result of what they learned during the process, Playboy Enterprises is reportedly working feverishly to get their own BBS online. Although she declined specific comment, a Playboy spokeswoman did say "we're working on something."

As a classic cottage industry, operating a BBS for profit seems to be attractive to husband-and-wife teams. Brian Miller and Tess Heder run what is considered by many to be one of the best bulletin boards in the country. Miller was a clinical psychologist in Cambridge while Heder was trained as an architect. But Miller dialed a BBS called Northern Lights in 1985 and decided almost instantly that this was a business opportunity. Unlike most systems operators (sysops), who go online as a hobby and grow into it, Miller knew from the start that he wanted to operate a BBS as a business.

Today, Channel 1 BBS offers 85 telephone lines, 2,500 message conferences, and over 30 Gbyte of files from a small house off of Harvard Square. Indeed, the BBS grew to fill every knook and cranny of the tiny building – to the point where Brian and Tess were forced out. They built a new $400,000 four-story townhouse across the back yard and let the BBS have the original building. The couple spend nearly every waking moment "tending to the baby," but it pays off. The system was the only BBS to receive the John C. Dvorak Award for Telecommunications Excellence at the Online Networking Exposition and BBS Convention held in Denver last year.

Brian practices psychology almost exclusively on callers these days. And it has been some time since Tess has done much architectural work. But the university atmosphere of Harvard Square provides a nice diversion in the bit of time they take from running the BBS.

The key to success for these boards? First, persistence seems to pay off. Virtually all of the bulletin boards that really do well have been in continuous operation for at least five years. It takes time to build a system from the ground up, and most of these systems were built without investment money. The sysop typically puts less than $10,000 in the system to start, then funds growth of additional telephone lines, hard disk storage, and other enhancements from the subscription fees sent in by the callers.

Second, the operators of these systems are in touch daily and continuously with what their callers do online. Most of the failed commercial online services had a concept of the online world as "videotext." They would purchase information, arrange it in pretty screens, and "deliver" it to the subscribers.

Despite continuous failure of this model, the notion still persists. Grassroots bulletin boards perform two functions – acquisition and communication. Callers want unlimited access to an unlimited store of software available for download. And they want to talk to each other.

Bulletin boards typically "share" message conferences by passing or exchanging messages in chains that stretch across the country and around the world and in many cases consist of thousands of other bulletin boards. These conferences are arranged topically. A single conference on genealogy, for example, might have active participation from callers on several thousand bulletin boards. And each bulletin board often carries hundreds of these conferences.

Less than 20 percent of the 45,000 BBSes have been in operation for more than three years. But increasingly, individuals and small groups are finding that you can start a BBS with a very modest amount of capital and a lot of sweat equity. As with most businesses, the sign of success is when you have essentially built yourself a $40,000 per-year job after years of building the business. But with bulletin boards there is apparently no ceiling on the number of callers, or on the income their calling brings in.

Independently operating a basement BBS and making a living at it is incredibly attractive to a growing army of corporate burnouts who believe that there has to be a better way. That kind of desire augers well for more and better bulletin boards in the future. It's unlikely we've yet seen the end of the bulletin board boom of the '90s.

What You Need as a Caller

Besides a modem, a phone line, and a personal computer, you do need a software program to support modem communications. Many communications programs are available as shareware that you can download and try before you pay for them – but of course you need a program to do that as well. In most cases, your modem will include a very basic terminal program that is sufficient to dial bulletin boards and download one of the more popular communications packages, which include Procomm, by DataStorm Technologies of Columbia, Missouri – the shareware version is available from their BBS at +1 (314) 875 0503; Telix from DeltaComm Development in Cary, North Carolina – the shareware version is available for download from their BBS at +1 (919) 481 9399; and Qmodem, which can be downloaded at +1 (805) 395 0650.

What You Need as a Sysop

What you need to operate a BBS is not terribly different from what you need to call one – one reason why so many new BBSes arrive online each year. A bulletin board is essentially networked access to your hard-disk drive. All the messages, files, menus, bulletins, and artfully designed ANSI text screens reside on this hard disk. The general rule is that 30 Mbyte of disk space is too little, and that 30 Gbyte is also too little. So it doesn't really matter. Serious bulletin boards currently tend to start at about 1 Gbyte, but we still come across some good special topic systems running off of an 80-Mbyte drive.

The heart of an electronic bulletin board is the BBS software program that answers the telephone, greets callers, and presents them with a variety of options. There are literally dozens, and perhaps hundreds, of different titles from which to choose, depending on the hardware platform you will use. Many are available as shareware and can be downloaded from other bulletin boards. Popular shareware titles include Wildcat, Remote Access, Quick BBS, PCBoard, Searchlight, Maximus, Opus, WWIV, Teleguard, and RBBS. On a Macintosh system, you can choose from at least three packages right now: 1st Class, Novalink Professional, and Telefinder. All support iconic menu systems and multiple telephone lines.

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